Correlation Between AfroCentric Investment and DRDGOLD
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and DRDGOLD at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AfroCentric Investment and DRDGOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfroCentric Investment Corp and DRDGOLD Limited, you can compare the effects of market volatilities on AfroCentric Investment and DRDGOLD and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AfroCentric Investment with a short position of DRDGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and DRDGOLD.
Diversification Opportunities for AfroCentric Investment and DRDGOLD
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between AfroCentric and DRDGOLD is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and DRDGOLD Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited and AfroCentric Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AfroCentric Investment Corp are associated (or correlated) with DRDGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and DRDGOLD go up and down completely randomly.
Pair Corralation between AfroCentric Investment and DRDGOLD
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to under-perform the DRDGOLD. In addition to that, AfroCentric Investment is 2.79 times more volatile than DRDGOLD Limited. It trades about -0.12 of its total potential returns per unit of risk. DRDGOLD Limited is currently generating about -0.07 per unit of volatility. If you would invest 185,000 in DRDGOLD Limited on September 12, 2024 and sell it today you would lose (6,900) from holding DRDGOLD Limited or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfroCentric Investment Corp vs. DRDGOLD Limited
Performance |
| Timeline |
| AfroCentric Investment |
| DRDGOLD Limited |
AfroCentric Investment and DRDGOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfroCentric Investment and DRDGOLD
The main advantage of trading using opposite AfroCentric Investment and DRDGOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, DRDGOLD can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DRDGOLD will offset losses from the drop in DRDGOLD's long position.| AfroCentric Investment vs. Life Healthcare | AfroCentric Investment vs. Sasol Ltd Bee | AfroCentric Investment vs. Centaur Bci Balanced | AfroCentric Investment vs. Growthpoint Properties |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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